Post on 10-Apr-2018
transcript
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UBS Debt Investor reverse roadshow
Stockholm20 February 2008Mikael Inglander, CFO
Jan Lilja, Head of Group Treasury
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LatviaTotal population: 2.3mEmployees: 2,501Private customers: 0.8mCorp. customers: 53,000Branches: 77Typical market share: 30%
The leading bank in four small countries
SwedenTotal population: 9.2m
Employees: 8,750Private customers: 4.1mCorp. customers: 275,000Organisations: 120,000Branches: 459Typical market share: 25%
LithuaniaTotal population: 3.5mEmployees: 3,384Private customers: 3.0mCorp. customers: 78,000Branches: 128Typical market share: 30%
EstoniaTotal population: 1.3m
Employees: 3,227Private customers: 1.2mCorp. customers: 88,000Branches: 94Typical market share: 50%
Supporting markets: Denmark, Finland, Norway, Russia,Ukraine, USA, Luxemburg, China, Japan and Spain
80%
6% 5% 5%4%
Sweden
Estonia
Latvia
Lithuania
Othe
rs
Share of group lending
Potential home markets: Russia and Ukraine
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Strong position for profitability and growth
Ukraine and RussiaBalticsSweden
Stable baseGrowth andexperience
Future growth andprofitability
Swedbank is the leading bank inSweden. Profitability is high andstable and the bank isconsolidating its market shares inimportant segments in both theprivate and corporate sectors.
Swedbank has a small butgrowing presence in Ukraine andRussia . Long-term, a significantshare of Swedbanks growth willbe generated in these markets.
The Baltic economies areexperiencing strong economicgrowth that is expected to remainfor many years. As the largestbank in the region, growing withthe market ensures Swedbank anattractive earnings growth.
Share of profit2007: 66%
Share of lending2007: 80%
Share of profit2007: 2%
Share of lending2007: 2%
Share of profit2007: 32%
Share of lending2007: 16%
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Swedbank, group overview
52%
32%
2%8% 8%
-2%-10%
0%
10%
20%
30%
40%
50%
60%
SwedishBanking
BalticBanking
SwedbankMarkets
Asset
Management& Insurance
InternationalBanking
SharedServices& Group
Staffs
Share of Group net profit, Q1-3 2007
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2007 A successful and eventful year Profit attributable to shareholders increased 10% to SEK 12bn
Net interest income increase by 20%
Net commission income increased by 11%
Swedish Banking show a stable result, low risks and high return onequity
Record result in Baltic Banking with balanced risks
Swedbank Markets results on same level as last years all time high
A successful year despite global credit turmoil
and Baltic slowdown
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Q4 2007 Good development and strong results Good volume development in Sweden
Stable margins on new lending
Continued strong results in Baltic banking
Economic slowdown align with expectations
Strong finish of the year for Swedbank Markets
Success in fixed income trading and structured investment products inSweden and corporate finance in Norway
Swedbank Ukraine continues to develop well
Profit increased 7% compared with Q4 2006
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Solid profit development
*Loan losses, net = write-offs + provisions recoveries + change in property taken over
-1,000
1,000
3,000
5,000
7,000
9,000
11,000
13,000
15,000
17,000
2000 2001 2002 2003 2004 2005 2006 2007
-1,000
1,000
3,000
5,000
7,000
9,000
11,000
13,000
15,000
17,000
Profit before loan losses Capital gains EnterCard and KIAB
Loan losses, net* Operating profit (excl. capital gains)
SEKm SEKm
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Minor direct effects from the credit turmoil
Valuation- and accounting effects, SEK M
Q4
2007
Q3
2007
Swedbank Markets 40 60
Group Treasury, liquidity portfolio 5 68
Group Treasury, intra-group lending 20 90
Swedbank Mortgage 66 129
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Business volumes
84
13 24
334
102
1931
289
398 401
0
100
200
300
400
500
Deposits,
Sweden
Deposits,
Baltics
AM funds,
Sweden
AM funds,
Baltics
Structured
products,
bondsDec, 2006 Dec, 2007
SEKbnSavings
919
425
333
53 74 3477
100
61
390475
1,103
0
200
400
600
800
1,000
1,200
Lending,
Group
Private,
Sweden
Corporate,
Sweden
Private,
Baltics
Corporate,
Baltics
Other
Dec, 2006 Dec, 2007
SEKbnLending
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Credit quality, group
200
0
2001
2002
2003
2004
2005
2006
2007
-0.08
0.00
0.08
0.160.24
0.32
0.40
0.48
0.56
0.64
Loan loss ratio, net Share of impaired loans
Share of provisions
%
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Margins
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q3-
06
Q4-
06
Q1-
07
Q2-
07
Q3-
07
Q4-
07
Estonia Latvia
Lithuania Sweden
% Lending
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q3-
06
Q4-
06
Q1-
07
Q2-
07
Q3-
07
Q4-
07
Estonia Latvia
Lithuania Sweden
Deposits%
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Swedish Banking Continued stable earnings and high profitability
Strong corporate lending during Q4
Total lending increased by 4% vs. Q3 and 14%
during the full year
Continued good deposit trend
Deposits increased by 3% vs. Q3 and 15% duringthe full year
Share of new savings from households
increased to 18% (17% in Dec 06)
Rise in funding costs are gradually, but withcertain delay, passed on through higher lendingrates
Minor valuation effects as a consequence of theturmoil on the credit market
Covered bonds as from Q2 2008
In agreement to sell 8 branches to savingsbanks
Swedish economy still relatively strong.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,0004,500
5,000
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Income Costs C/I-ratio
SEKm %
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Baltic Banking Operations Continued high profitability
Net interest income increased 7% vs. Q3
Lending growth in 2007 was 33%, the gradualslowdown is expected to continue
Weak trading income due to market turmoil
Costs affected by
Annual wage increases in Latvia and Lithuania,hits P&L as of October every year
Investments in operational excellence projectfor increased productivity
High marketing costs.0200
400
600
8001,000
1,200
1,400
1,600
1,800
2,0002,200
2,400
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
0.0
0.1
0.2
0.3
0.4
0.5
Income Costs C/I-ratio
SEKm %
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Credit quality, Baltic Banking
Loan loss ratio, net (average portfolio)
-2.0%
-1.2%
-0.4%
0.4%
1.2%
2.0%
2002 2003 2004 2005 2006 2007
Estonia Latvia Lithuania Group
Share of impaired loans (12 month old portfolio)
0.0%
0.5%
1.0%
1.5%
2.0%
2002 2003 2004 2005 2006 2007
Estonia Latvia Lithuania Baltics Group
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Decreasing Baltic lending growth
0%
10%
20%
30%
40%
50%
60%
07
/Dec
07
/Sep
07
/Jun
07
/Mar
06
/Dec
06
/Sep
06
/Jun
06
/Mar
05
/Dec
05
/Sep
05
/Jun
05
/Mar
0
1,000
2,000
3,0004,000
5,000
6,000
7,000
8,000 Hansabank, Estonia
0%
10%
20%
30%
40%50%
60%
70%
80%
90%
100%
07
/Dec
07
/Sep
07
/Jun
07
/Mar
06
/Dec
06
/Sep
06
/Jun
06
/Mar
05
/Dec
05
/Sep
05
/Jun
05
/Mar
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000 Hansabank, Latvia
0%
10%
20%
30%
40%
50%
60%
70%
07
/Dec
07
/Sep
07/Jun
07
/Mar
06
/Dec
06
/Sep
06/Jun
06
/Mar
05
/Dec
05
/Sep
05/Jun
05
/Mar
0
1,000
2,000
3,000
4,000
5,000
6,000 Hansabank, Lithuania
0%
10%
20%
30%
40%
50%
60%
70%
07
/Dec
07
/Sep
07/Jun
07
/Mar
06
/Dec
06
/Sep
06/Jun
06
/Mar
05
/Dec
05
/Sep
05/Jun
05
/Mar
0
2,000
4,000
6,000
8,00010,000
12,000
14,000
16,000
18,000
20,000 Baltic Banking
0
%
0
00
0
,Total lending, EURm YoY growth
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Baltic macro development
Real GDP growth
0%
2%
4%
6%
8%
10%
12%
2005 2006 2007F 2008F 2009FEst Lat Lit
CPI growth
0%
2%
4%
6%
8%
10%
12%
2005 2006 2007 2008F 2009FEst Lat Lit
Economic slowdown in Estonia continues: GDP growth slows from ~7% in 2007 to ~5% in2008; the bottom of the cycle is expected to be in Q2 2008
In Latvia growth slows from ~10.5% to 6% in 2008, the bottom of the cycle is expected to bein H2 of 2008
Slowdown in Lithuania started in Q4 2007: GDP growth will slow from 2007s 8.7% to ~7.5%in 2008
Weak domestic demand reduces imports and exports growth continues. Trade and currentaccount deficits are falling. CPI will peak in Q1 2008. Long term GDP growth (6-7%) will beabove EU average.
Source: Hansabank Market
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Swedbank Markets
Good end to the year despite the capitalmarket turmoil
Strong results in, above all, fixed income andFX trading, structured investment productsand corporate finance fees First Securities
Minor valuation effects due to market turmoil,
SEK - 40m Continued market leader in corporate bonds,
new issues in SEK
Sustained growth and market leading
position in structured products, sales grew by39% in 2007.
0
50
100
150
200
250
300
350
400
450
500
Q1
06
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
Profit for the period attributable to shareholdersof Swedbank
SEKm
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International Banking Continued strong lending growth in Ukrainian
Banking, + 112% to SEK 11bn in 2007
Loan loss ratio, net in Ukrainian Bankingdecreased after adjusting calculation methodto Swedbank Groups principles
Annual lending growth in Russian Banking
was 50% to SEK 10bn
Following positive court rulings regarding VATdispute in leasing operations, a reversal ofSEK 60m was made in Russian Banking
Lending in Nordic branches more thandoubled in 2007, reaching SEK 13bn.
-100
-75
-50
-25
0
25
50
75
100
Q206
Q306
Q406
Q107
Q207
Q307
Q407
International Banking, profit for the period
of which Russian Banking
of which Ukrainian Banking Operations
SEKm
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Business areas
2007 vs 2006, SEKm 2007 % 2007 % 2007 % 2007 % 2007 %
Net interest income 11,701 5,667 986 1,343 83
Net commission income 4,504 1,854 196 1,441 1,868
Other income 1,473 1,252 97 773 232
Total income 17,678 4 8,773 42 1,279 3,557 1 2,183 19
Staff costs 4,296 2,044 405 1,239 425
Other expenses 4,704 1,502 366 753 463Total expenses 9,000 3 3,546 32 771 1,992 3 888 31
Profit before loan losses 8,678 5 5,227 50 508 1,565 0 1,295 13
Loan losses 71 450 170 0 0
Operating profit 8,607 -2 4,777 49 338 1,565 -1 1,295 13Tax 2,413 455 70 427 320Profit for the period 6,194 4,322 268 1,138 975
To Swedbank's
shareholders 6,182 2 4,322 46 268 1,010 3 975 11
Return on allocated equity % 23.2 31.2 6.9 24.2 57.0
Asset
Mgmt
Internat.
Banking
Swedish
Banking
Baltic
Banking
Swedbank
Markets
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Key figuresJan - Dec,
2007
Jan - Dec,
2006
Return on equity, % 18.9 19.3
Earnings per share, SEK 23.28 21.11
Equity per share, SEK 131.96 116.37
C/I ratio before loan losses 0.51 0.52
Loan loss ratio, net, % 0.07 0.02Share of impaired loans, % 0.13 0.07
Dividend, SEK* 9.00 8.25
Tier 1 capital ratio, new principles, % 8.5 -
Tier 1 capital ratio, transition principles, % 6.2 6.5 **
Capital adequacy ratio, new principles, % 12.7 9.8 **
*according to Board of Directors proposal**according to old principles
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Tier-1 ratio, Group
Tier 1 ratio amounted to 8.5%
Tier 1 ratio, according to transitionprinciples, was 6.2%
As of January 1, 2008, tier 1 ratioaccording to transition principles,increased by 31 bps due to the gradualimplementation of Basel 2 regulations.
0
1
2
34
5
6
7
8
9
10
Q1-05
Q2-05
Q3-05
Q4-05
Q1-06
Q2-06
Q3-06
Q4-06
Q1-07
Q2-07
Q3-07
Q4-07
0
1
2
34
5
6
7
8
9
10
Tier 1 ratio, Basel 2
Tier 1 ratio, transition rules
Target Tier 1 ratio
% %
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Swedbank Funding Structure
Swedbank
Mortgage
SEK 561bn
Swedbank Group,
excl. SwedbankMortgage
SEK 542bn
51%49%
Funding95%
Equity
5%
Deposits
85%
Equity
8%
Funding
8%
Swedbank Treasury (excluding Mortgage)
Large deposits
Liquidity reserves
Net lender in theinterbank market
Liquidity limits conservative view
Swedbank Mortgage
constitutes a larger part of
Swedbank Groups balance
sheet compared to other
financial institutions
Distribution of Net Funding Need
Swedbank Mortgage
Lending to the public, SEK 1103bn
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Swedbank Mortgage Credit RiskMunicipalities
3% (4)Commercial
buildings
1% (1)
Agriculture
6% (6)
Multi-family housing
incl. Condominium
associations
16% (17)
Individual
condominiums
13% (11)
Single-family homes
61% (61)
0,00
10,00
20,00
30,00
40,00
50,00
60,00
70,00
85%
Distribution of loan to value
Net
0
500
1000
1500
2000
2500
3000
2000 2001 2002 2003 2004 2005 2006 2007
SEKm
=90% Residential loans
%
Average LTV of 44%80% percent of the portfolio has an LTV of 50% or lower
Credit losses
-Net recoveries during 2007
Impaired, restructured and past due loans At historically low levels
31-dec
-100
0
100
200
300
400
500
600
700
2000 2001 2002 2003 2004 2005 2006 2007
SEKm
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Converting to Covered Bonds, Q2 2008 Possibility to meet a broader investor base
Larger investor base ensures for even more stable liquidity
AAA-rating - funding at lower cost
Increased liquidity reserve through Swedbanks possibility to pledgesubsidiary covered bonds in Riksbanken
Funding strategy to prolong maturity structure with covered bonds
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Swedbank Mortgage Long Term Funding
Action plan:
Conversion to covered bonds during Q2, 2008 and covered bond issues, approx. EUR 6.0bn
Continuous activities in the market for private placements, approx. EUR 1.5bn
Continuous issues on tap in the Swedish mortgage bond market under existing mortgage
bond programme, approx. EUR 7.5bn
The issue of a new 5-year Swedish benchmark bond Swedbank Mortgage 177
The maturity of SPI173 in June, 2008 is smaller than the average yearly maturing domestic
benchmark bond
Swe dbank Mortgage - Long Term Funding
0
50 000
100 000
150 000
200 000
250 000
5y
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Additional questions?
Johannes RudbeckInvestor relations
johannes.rudbeck@swedbank.se
+46858593322
mailto:johannes.rudbeck@swedbank.semailto:johannes.rudbeck@swedbank.se